The mandatory disclosures outlined in the Florida Statutes are an often overlooked or unknown disclosure requirement by the Seller of a property located in a Condominium Association (COA) or a Homeowner’s Association (HOA).” Failure by the Seller or their agent to timely provide these disclosures can lead to the Buyer receiving an easy ticket out of the closing.
What disclosures are required for a prospective purchaser of an HOA?
Section 720.401, F.S., requires the Seller of a property in an HOA to provide certain disclosures to the Buyer. These disclosures are often referred to as the HOA “Disclosure Summary.” The statute provides the exact language required and is found here. The Disclosure Summary notifies the Buyer, among other things, that the property is subject to an HOA, the Buyer can be subject to pay assessments to their association, and failure to pay these assessments may result in a lien on the property. Additionally, the Seller is required to provide the Disclosure Summary within the contract for the sale of the property.
What disclosures are required for a prospective purchase of a COA?
Section 718.503, F.S., requires the Seller of a property in a COA to provide certain governing documents (Declaration, ByLaws, Articles of Incorporation, Financial Information, etc.) of the association to the Buyer and include specific language pursuant to 718.503 (2)(c), F.S., in the contract for sale regarding the buyers’ rights to review these documents. The exact language required can be found here.
What happens if the COA/HOA disclosures are not provided?
Failure to provide the required disclosure language in the contract will grant the Buyer the option to void the contract prior to closing. Additionally, suppose the governing documents are not provided to the Buyer upon signing the contract. In that case, the Buyer is granted the right to cancel the contract within three days after receiving the governing documents or extend closing for up to three days.”
If the HOA Disclosure Summary is not in the contract, the Buyer has the right to void the contract prior to closing. Additionally, suppose the Disclosure Summary was not provided to the Buyer prior to them executing the contract. In that case, the Buyer is granted the right to void the contract within three days of receiving the Disclosure Summary.
How to avoid a failed deal caused by the statutory disclosures?
Thankfully, the Florida Bar and the Florida Realtors have created Comprehensive Riders A & B to the Residential Contract for Sale and Purchase. Rider A is specific to COAs, and Rider B is specific to HOAs. Riders A & B provide all the required disclosures under Section 720.401 & Section 718.503, F.S. In order to avoid a failed transaction, Sellers must be cognizant of submitting an executed version of the applicable rider to the Buyer when they are signing the original contract. Additionally, Sellers should fill in the required information in each rider applicable to their specific association (name of the association, amount of monthly/quarterly/annual assessments, etc.) and if you are selling property subject to a COA, provide the Buyer with the governing documents if such is requested in the Rider as soon as possible. Preferably, these governing documents should be provided to the Buyer upon or before execution of the Contract. By doing the above, the Seller eliminates granting the Buyer their statutory right to void the contract.
If you have any questions regarding the statutory disclosure requirements, Contact your local real estate attorney for further guidance.
